Reliance Industries (RIL) today revealed that social media network Facebook will pick up 9.99 percent equity stake in Jio Platforms for Rs 43,574 crore or $5.7 billion.
The proposed investment by Facebook values Jio Platforms at Rs 4.62 lakh crore or ($65.95 billion) based on pre-money enterprise value.
Facebook said its goal is to enable digital-powered business opportunities for businesses, especially for more than 60 million small businesses across India.
WhatsApp has 400 million users in India, its biggest market, reaching nearly 80 percent of smartphone users in the country. Reliance Jio is the largest 4G service provider in India — ahead of Bharti Airtel, Vodafone Idea and BSNL.
Facebook-owned WhatsApp has secured approval to roll out its digital payment service in India,to compete with the likes of Google Pay and Paytm.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries, is a technology company with assets such as Jio’s digital apps, digital ecosystems and connectivity platform under one umbrella.
Reliance Jio, which provides mobile connectivity to over 388 million subscribers, is a wholly-owned subsidiary of Jio Platforms. Mukesh Ambani, the richest Indian, is the promoter of Reliance Industries.
This is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in the technology sector in India. The investment values Jio Platforms amongst the top 5 listed companies in India by market capitalization, RIL said on Wednesday.
The focus of Reliance Industries’ digital business will be on India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector, in addition to mobile phone customers in India.
Facebook, which faces data privacy challenges, aims to generate more engagements with Indians on WhatsApp, Facebook and Instagram platforms with the investment in Jio.
Mark Zuckerberg’s Facebook, which recently revealed that the coronavirus crisis had impacted its advertisement business, had 1.66 billion daily active users on its social media network. Facebook posted revenue of $70.697 billion in 2019.
Jio Platforms, Reliance Retail and WhatsApp have also entered into an agreement to accelerate Reliance Retail’s New Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp.
The companies will work to ensure that consumers are able to access the nearest retail shops who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.
Morgan Stanley as financial advisor and AZB & Partners and Davis Polk & Wardwell as counsels advised on the transaction.